Penalty proceedings u/s. 140A(3) for failure of assessees to pay the tax due from them on self assessment. - Income Tax - 389/CBDT

INSTRUCTION NO. 389/CBDT Dated: March 13, 1972 Section(s) Referred: 140A(3) Statute: Income - Tax Act, 1961 Reference is invited to the Board's Instruction No. 285 issued under their letter of even number dated 22-4-1971. 2. The Board have been receiving complaints about the delayed initiation of penalty proceedings u/s. 140A(3) for failure of assessees to pay the tax due from them on self assessment. It is being rightly observed that since the purpose of providing for such penalty is to produce a deterrent effect on persons failing to pay the tax admittedly payable on the income returned any delay in initiating the proceedings would be self-defeating. Besides, it is being suggested that the initiation of such penalty proceedings would be probably unfair, if not illegal. 3. The Board are of the view that there is nothing in Section 140A to suggest that a penalty proceeding under this Section must be initiated in the course of the assessment proceedings. Even so, they consider it advisable not to delay the initiation of such penalty proceedings beyond a month after the due date of payment. Any delay in this respect would defeat the purpose of the penalty provision, which is to secure prompt payment of the tax due. They believe that there would not be many cases where the penalty proceedings u/s. 140A(3) are initiated or completed after the completion of the relevant assessment proceedings. If there are any, these should be closed expeditiously.